A method that was used at Philips N.V. for the purpose of the appraisal is known as the Philips model of the potential appraisal.
This model works on a two-by-two matrix where two ends of potential and performance appraisal are combined.
In this model, the capacity of managers to adjust in a dynamic environment of the market and their capability to take greater responsibilities for various tasks and decisions are evaluated at its initial stage.
Further, these capacities are under continuous observation. This two-by-two matrix consists of the following categories:
1. Low Potential and Low Performance: Under this quadrant, employees with low performance and low potential are given a chance to overcome their issues.
In case they fail to bring any positive change to enhance their potential and performance, then the organization will leave such employees.
2. Low Performance and High Potential: Under this, quadrant employees with high potential but with low performance are recognized.
Such employees are provided with opportunities for changes, like location, superior, or profile, in order to overcome their low-performance level.
These employees are also named as ‘problem employees.’ When an organization takes suitable efforts, then most of the employees are able to overcome their performance issues.
But those employees who are unable to improve, even after these efforts, the organization will plan to leave such employees.
3. Low Potential and High Performance: This quadrant belongs to the employees with low potential but with higher performance.
These employees are named as ‘solid citizens.’ These employees possess a greater degree of skill, but due to their lower capacity, they are restricted from developing further.
Usually, in big organizations, most of the employees fall under this quadrant; hence organization has to meet the benefits of these employees.
4. High Performance and High Potential: Employees under this quadrant are considered as ‘star performer’.
These employees are usually given difficult tasks to perform, and with time these employees develop such skills and potential, which help them to handle assignments of a high standard.
Benefits of Philips Model of Potential Appraisal
Organizations following this approach will get the benefit of employee classification into four major categories.
Under these categories, an organization can decide which employee to retain and which employee to lose.
Further, it also helps in making decisions regarding various training programs for the development of employees.
Therefore, this model is very useful for raising the potential and performance standard of both employees and organizations.